Judge Orders Hearing on Lowering Keating’s Bail : Thrifts: Prosecutors oppose a reduction because the seriousness of the charges gives the former chief of Irvine-based Lincoln S&L; a ‘motive to flee.’

A federal judge Tuesday ordered a hearing to determine whether he should lower the $5-million bail set for Charles H. Keating Jr., who has been jailed since he was indicted a month ago on state charges of securities fraud.

In a brief order, U.S. District Judge John G. Davies scheduled the hearing for 1:30 p.m. Thursday.

Davies’ decision came after the Los Angeles County district attorney’s office filed documents that said Keating’s bail should not be reduced or lifted because of the seriousness of the criminal charges and other legal actions give him “a strong motive to flee.”

Keating, who has been jailed since Sept. 18, had gone through the state appellate system seeking a review of the bail amount. A state Court of Appeal panel refused to lower bail, and the state Supreme Court refused to hear the case.

Keating, 66, is the former chairman of American Continental Corp. in Phoenix, which owned Lincoln Savings & Loan in Irvine. The company filed for bankruptcy in April, 1989; federal thrift regulators seized Lincoln the next day.

Regulators say Lincoln is one of the nation’s worst S&L; disasters and estimate that it will cost U.S. taxpayers more than $2 billion to clean up the thrift.

The company sold nearly $200 million in junk bonds through Lincoln’s 29 Southern California branches, and the small investors who bought the bonds say they were misled into believing that the bonds were safe and federally insured.

The 42-count indictment accuses Keating and three others of providing investors with false and misleading information and violating other state laws in selling the bonds, which have become worthless since the collapse of the company and the S&L.;

A trial is scheduled Nov. 26, but both the Los Angeles County Superior Court trial judge and defense attorneys said they doubt that a trial could begin that soon.

In his federal court petition, Keating claimed that the $5-million bail set by Superior Court Judge Gary Klausner is excessive and beyond reach. Keating, who just three years ago was worth nearly $40 million, now claims to be broke.

Prosecutors responded that the bail is not excessive, even if Keating cannot afford it. They said he has had access to huge sums in the past and could try to tap into those sources in order to flee.

“The magnitude of the offense in this case sets it apart from other cases and justifies a bail setting higher than that which is customary in other cases,” the prosecutors said.